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my site is in magento, and my company got a letter in the mail from kelora systems lawyers saying about infringing on their parametric search. I just want to know if magento uses their search feature, or is it maybe a scam of some sort???

Roy, My lawyer is currently reviewing the packet they sent. It is basically a two page cover letter with the lawsuit and patent included. The cover letter mentions one of our websites and says that we can license the technology from them for $70,000, or get a 50% discount if we pay by December 3, 2010. The deadline is Dec 10. They finish by saying that if they reach a settlement in the case, the license fee will be considerably higher.

UPDATE AUGUST 2, 2011
If you received the most recent batch of letters from these people (and you are really concerned about this) please contact your lawyer.

If you want to make a serious business out of selling products on the internet, you really need to have a good lawyer. Yes, they are expensive, but it is worth it to have solid legal advice! I have been contacted by over 10 different people in the past few days who want my advice on what to do. I will post here exactly what I have been telling them: Please contact your lawyer about this, I am not a lawyer and don’t want to give out legal advice. You really need to contact a lawyer if this scares you, not someone you found on the internet.

This is called “Patent Trolling”. Basically it means that a company can develop and patent a product without ever having to actually use the product themselves. Then they “troll” for businesses who might be using infringing on their patent and either sue or send a “cease of use” notice. Unfortunately Kelora was granted a patent on their Parametric Search technology so it does give them the right to go after anyone who might be using this type of search. Legally, they have the upper hand right now. Check with your lawyers on this though.

We heard that over 10,000 letters were sent out all saying the same thing...pay $35,000-$70,000 for non-exclusive licensing rights. You have until Dec. 20., 2010 to respond back to Kelora’s lawyers...who, by the way, stand to gain millions by their actions. It’s all spelled out in the 70+ page document you might have received.

J.T.:
I posted some links in another thread here:
http://www.magentocommerce.com/boards/viewthread/212019/

Here is a repost of that info:

Wondering if anyone at Magento caught the recent frivelous suit from Kelora (aka PartsRiver) against Target, OfficeMax, and some other heavy online hitters:
http://www.docstoc.com/docs/60405793/Kelora-v-Target-Officemax-Shopko-Briggs-and-Stratton-et-al

The complaint is in regards to this patent:
http://ip.com/patent/US6275821

The patent is for a Ã¢â¬Åsearch methodÃ¢â¬Â where instead of a hierarchical approach, the application uses family groupings to narrow products (they call it guided parametric search). A hierarchical approach would be one where in order to get to Small Red Widgets I would have to first go to Widgets, then to Red Widgets, then to Small Red Widgets. If you wanted to get to Small Blue Widgets, I would have to go back to the top of the hierarchical tree and then select Blue and then Small to get my Small Blue Widgets. The issue with this being you may not know how your end user may prioritize those things. They may want to see all the Small Widgets and donÃ¢â¬â¢t care about the color, but in this hierarchical approach, that isnÃ¢â¬â¢t possible as its a branch past the color selection. Magento handles this by having grouping of objects based off these characteristics. I can, just as easily start of with all Small Widgets as I could with all Blue Widgets. This seems to be what Kelora is claiming as their patent.

The have also tried to sue some other Ã¢â¬Åbig dogsÃ¢â¬Â previously (microsoft, yahoo, shopzilla...):
http://docs.justia.com/cases/federal/district-courts/texas/txedce/2:2007cv00440/105781/1/

of which Microsoft counter-sued:
http://www.docstoc.com/docs/61865036/Microsoft-v-PartsRiver-and-Kelora-Systems

As this search/browsing functionality is a prime part of Magento, it isn’t something one could turn off or comment out.

I have to agree with rondata and that they are basically suing anyone they can get contact info for. If they can get enough to pay (to avoid the hassel) they can have a war fund to continue their fight against the larger ones and begin actually going after the smaller ones. Hopefully this will go away when either one of the big guys (Microsofts counter suit) wins or makes the legal cost of such a fight too costly.

Also it looks like eBay has also counter-sued:
http://dockets.justia.com/docket/california/candce/5:2010cv05106/234117/

I can\’t find the actual docs anywhere and I\’m not 100% sure if this is a new suit or if they are joined with Microsoft on their suit (some preview docs of the case seem to imply this.....unfortunately I can\’t find the full filings anywhere and I dont see them joined on the initial counter-suit doc linked above).

If anyone is interested, here is an older judgement against PartsRiver (aka Kelora)
http://docs.justia.com/cases/federal/district-courts/california/candce/4:2009cv00811/212919/234/

Its alot of lawyer-ese but the basic contention by the defendents is that PartsRiver offered to sell their application a year prior to submission for patent. The judge found in the defendents favor in invalidating the patent. Now, that was appealed and I\’m not sure where that part of it stands but I would bet a similar defense is applicable against the Kelora suit.

The Court concludes that claims 1 and 2 of the Ã¢â¬Ë821 patent are invalid due to the on-sale bar because they were the subject of a commercial offer for sale of an invention that was reduced to practice before October 14, 1993. The Court grants DefendantsÃ¢â¬â¢ motion for summary judgment of invalidity.

Here is the appeal....I would be lying if I said I understood it (was updated just last week):
http://docs.justia.com/cases/federal/district-courts/california/candce/4:2009cv00811/212919/254/

If I\’m understanding it correctly its setting up the proceedings for PartsRiver to plead its appeal case.

Not sure if this means it’s all over or not. Kelora gained the rights for the patent from PartsRiver (and then began sending out letters / suits).

Their (Kelora’s) case is still pending. Most recently the defendents moved to have the trial change jurisdiction down to the same court system as the PartsRiver case (Northern California) which was granted. The entire case log for Kelora v. Target Corporation , OfficeMax Inc. , Amazon.com, Inc. , Dell, Inc. , Office Depot, Inc. , Newegg Inc. , et all is here:
http://dockets.justia.com/docket/california/candce/5:2011cv01548/238973/

The ruling against PartsRiver seems fairly damning (and I would assume will sink Kelora’s case as well).

It appears that the court originally invalidated the patent held by PartsRiver, and the Patent and Trade Office was taking similar action, so PR modified its patent claims, following which the PTO declared the revised claims patentable. eBay and MSFT contended the claim by Kelora (the new owner of the patent) should be dismissed on summary judgment because the new patent is identical in scope to the original one, but the court rejected that.

So it sounds like the case is essentially re-starting. Does anyone else have any insights or thoughts?

I got my letter from Manatt Phelps (Kelora’s law firm) and I submitted it to Magento Legal as instructed. I haven’t heard anything but I’m looking for guidance here. I’d really hate to hire a lawyer, etc. Can someone from Magento contact me or respond here as to what all of us should do?

We received the same letter as well and attempted to contact Magento Legal but have heard nothing. We have even attempted to private message Magento members on this posting and have heard nothing back. Can someone please respond to this to let us know what is going on?

If you received the most recent batch of letters from these people (and you are really concerned about this) please contact your lawyer.

If you want to make a serious business out of selling products on the internet, you really need to have a good lawyer. Yes, they are expensive, but it is worth it to have solid legal advice! I have been contacted by over 10 different people in the past few days who want my advice on what to do. I will post here exactly what I have been telling them: Please contact your lawyer about this, I am not a lawyer and don’t want to give out legal advice. You really need to contact a lawyer if this scares you, not someone you found on the internet.